Social Security's Surplus Disappearing Fast in Downturn

They are both an asset and a liability for accounting purposes. They cancel themselves out for the whole organization. But if a corporation owns bonds in a subsidiary, the subsidiary counts the bonds as a liability and the owning corporation counts the bonds as an asset. The subsidiary is then treated as having a lower book value than if it hadn't issued bonds.

The SS Trust Fund bonds are an asset for SS, but a liability against the government. The government guarantees those bonds through general taxation, something SS can't do without Congressional approval.

Many of us don't like that situation because it may mean rising taxes when SS starts to redeem the bonds in the Trust Fund.

-- Ron

OK. But that's the converse of the situation with the federal government and Social Security. Social Security is the "subsidiary" and the federal government is the "corporation" (I think). So in this case, the subsidiary holds bonds in the corporation. How does that work?

--Bill

Again, the SS Trust Fund bonds are an asset for SS and guaranteed by the US government for whom they are a liability.

-- Ron

The US Treasury site confirms this observation. The Debt is broken in Public and Government holdings. SS and medicare surpluses are supposed to be invested in treaturies. For the last several years they increase about 20 billion a month. But its been going down since Nov 2008.